No Surprise: Education Determines Employment Status

The jobs report illustrates yet again the disparities experienced by people with different education backgrounds.

Unemployment is considerably lower for those with higher levels of educational attainment. The unemployment rate for those with a college degree has hovered near 2.5% for the past two years, while unemployment for those without a high-school degree was 7.7% in January.

Facebook

Twitter

January's 227,000 Jobs Don't Move Needle on Monthly Average

January looked strong, if you stopped reading after the first headline.

The 227,000 jobs added were the best since September - even before this morning's revisions. But it's those revisions that put this morning's number into context. November was revised down to 164,000 from 204,000, and December was revised up to 157,000 from 156,000. The three month average works out to 183,000, a bit weaker than 2016's monthly average, after the revisions, of 187,000. That was weaker than the averages in 2015 (226,000) and 2014 (250,000), too.

The January figures reflected the December numbers in another way, too. The key driver of January's strength was the accelerated layoffs in December, said SouthBay's Andrew Zatlin. When the government's bean counters went to work on the January survey, they bounced off the December numbers, one reason why retail seemed to add so many jobs in January (46,000).

The Dow Jones Industrial Average pops more than 100 points at the bell to reach 20003, after spending most of the week under 20000. Financial firms are leading the charge, with Visa is up 4.6%, Goldman Sachs is up 2.4% and J.P. Morgan Chase is up 1.8%. Those three are contributing more than 70 points on their own.

The S&P 500 is up 0.4% to 2291, and financials are leading the way there too. That sector is up 1.4%, but gains are broad, as eight of the 11 sectors are in the green at the moment.

Erik Holm

Facebook

Twitter

Jobs Figures Could Make Fed 'More Willing to Be Patient'

There's no consensus about whether March remains on the table for the Federal Reserve. Analysts and investors are all over the map in the wake of Friday's report.

Here's Anthony Karydakis, chief economic strategist at Miller Tabak:

“The story is the contradiction between the pace of hiring, which remains very robust, and the absence of any sustained acceleration in wages,” said Mr. Karydakis. “I think that will make the Fed more willing to be patient here.”

_- Sam Goldfarb
_

Facebook

Twitter

Emerging-Market Currencies Rise After Jobs Report

Emerging-market currencies have gotten a boost from this morning's U.S. jobs data, an indication that investors aren't too worried about the Fed's plans for raising rates.

The Mexican peso is up 0.9%, while the Turkish lira is up 1% and the Chinese yuan is up 0.2%.

Credit Agricole's Vassili Serebriakov says the mixed report "doesn't suggest that the Fed should be rushing to move faster."

That's a relief for many emerging-market nations: their dollar-denominated debts become more expensive to pay back and their assets become less attractive to yield-seeking investors when U.S. rates rise.

Odds of a March rate increase have fallen to 9% from 18%, CME data show.

- Chelsey Dulaney

Facebook

Twitter

That Was A Great Jobs Report If You Like Stocks

A strong headline number this morning on job creation mixed with a more downbeat reading wages is a recipe for more stock gains.

That's because the jobs market, although near full employment, is not tight enough to stoke inflation pressures that spur the Fed to raise rates faster than the markets expect (or as fast as the Fed's own dot plot of economic projections implies).

Dennis DeBusschere at ISI Evercore puts it this way: "

"The U.S. payroll report for January was about as good as possible for risk assets."

Taken together, the reading "gives the Fed more time to let growth improve before raising rates," Mr. DeBusschere says. "From a growth and financial market standpoint this was a very positive report indicating a virtuous cycle of low inflation and accelerating growth."

S&P 500 futures add 0.4%.

Chris Dieterich

Facebook

Twitter

Volume High in the Treasury Market Rally

Jim Vogel, a rates strategist at FTN Financial, writes that there are a lot of Treasury market buyers out there: "Buying volume so far is about 25% higher than a typical ‘surprise’ labor market release."

The yield on the 10-year note was recently down 0.03 percentage point to 2.437%, while the seven-year yield fell 0.04 percentage point to 2.217%.

Mr. Vogel's take on what's driving the market higher:

"First, unit labor costs missed badly in the fourth quarter after a big downward revision in the third quarter. That was interesting but not alarming until average hourly earnings missed in January after a downward revision in December. Suddenly, the timing of the expected labor cost inflation bubble has a longer horizon. It also, not to mention, douses current thinking about a possible rate hike in March."

Ben Eisen

Bonds

Facebook

Twitter

Still Room for Labor-Market Improvement

Gains in stock futures after the release of Friday's jobs report suggest investors don't fear a faster pace of interest rate increases from the Federal Reserve, some analysts say.

"The equity markets are really gearing up for better growth and want to see confirming evidence of that," he said. "A report like this could increase the likelihood the Fed will hike in March instead of June, but it's something the equity markets should easily take in stride."

ING Thinks a March Rate Rise Is Likely After Jobs Report

Despite a big miss on wages in the monthly U.S. jobs report, a March rate rise from the Federal Reserve remains likely, according to James Knightley, economist at ING.

"Today's wage growth numbers are not particularly helpful, but with GDP growth on an upward trend, the economy creating significant numbers of jobs and inflation figures looking consistent with the Fed's medium term aspirations we think the case remains strong," he writes in a note.

Riva Gold

Facebook

Twitter

Why the Stock Market Is Loving a Lackluster Report

The U.S. rates markets interpreted the jobs report as something of a disappointment, given that a strong headline number of new jobs failed to lift earnings as much as expected.

Still, the stock market extended gains after the report. Both Dow and S&P 500 futures suggest a rise of nearly half a percent at the open. To be sure, the market had already been up before the report, responding to a Wall Street Journal report that the Trump administration was set to begin rolling back financial regulations on Friday.

But for stock investors, a lackluster report is likely to be seen as a good thing, fitting into a theme that has resonated in the years since the financial crisis. The numbers aren't good enough for the Fed to accelerate the pace of tightening dramatically, which means more easy money to drive the market higher -- at least for now.

Case in point: Aberdeen Asset Management Senior Investment Manager James Athey writes in e-mailed comments: “This is just what the doves at the Fed wanted to see. All of the numbers point towards it being more difficult to justify another hike in March. Even the headline employment number won’t help.

After Donald Trump's election, the market rode higher on the idea that animal spirits may finally be starting to take off in the economy. So far, this jobs report shows little evidence of that.

Ben Eisen

Bonds,

Stocks

Facebook

Twitter

For Fed, March Likely Off the Table

Robust labor data this morning could have pressured the Fed a bit to consider more seriously taking their March meeting as an opportunity to boost short-term interest rates.

Likely not any more. Fed fun futures indicated just a 8.9% chance of a move by March, versus 18% on Thursday, according to CME Group data.

Andrew Hunter, U.S. economist at Capital Economics, explains why:

"The 227,000 rise in non-farm payrolls in January suggests that the labor market started the year on a reasonably solid footing.

However, the drop back in annual wage growth is another reason to think the Fed will hold off raising interest rates until June."

Chris Dieterich

Facebook

Twitter

Dollar Lower, Gold Marches Higher

The U.S. dollar is sinking and gold prices get a lift after January's disappointing labor market report, a sign that the Fed will be in no hurry to rush the next interest rate hike.

The WSJ Dollar Index edges lower after the report, while futures on gold up to $1,217 an ounce versus $1,213. Gold is priced in dollars and so the two often tend to move in the opposite direction.

Chris Dieterich

Facebook

Twitter

Traders Pare Rate Increase Expectations After Report

Traders in the market for fed funds futures, which show market expectations for the path of interest rates, are paring their bets on a more aggressive Federal Reserve.

The market suggests a 63% chance of a Fed rate increase by June, down from 69% on Thursday. There's now only an 8.9% chance of a move by March, versus 18% on Thursday, according to CME Group data.

That's being chalked up to the disappointing wage-growth numbers. Ian Lyngen, a rates strategist at BMO Capital Markets, writes to clients that the average hour earnings result "brings into question the likelihood that the Fed moves in March."

The numbers moved less further out into the future. There's a 67% chance the Fed moves at least twice by December, versus a 69% chance on Thursday, per CME Group.

Ben Eisen

Fed Funds Futures

Facebook

Twitter

Retail Created Jobs, But Not Much Wage Growth

Wage growth looked pretty weak, with earnings rising at only a 2.5% rate year-over-year. It was worse if you're not in management.

For all production and nonsupervisory employees, a group that comprises 80% of the work force, hourly earnings rose by 2.4%. Weekly earnings rose by 2.1%. These figures are not adjusted for inflation.

For retail workers, the category that added the most jobs in January, the numbers looked worse. Hourly earnings rose 1.9%, to $15.26 an hour. Weekly earnings rose only only 0.9%, to $452.22 a week, or about $26,600 a year.

Paul Vigna

Facebook

Twitter

Underemployment, Long-Term Jobless Cloud Progress

Signs of damage linger in the U.S. jobs market despite low headline unemployment and continued solid hiring.

A broad measure of unemployment and underemployment, known as the U-6, was 9.4% in January. That was its highest level since October and nearly twice the level of the official jobless rate, which is known as the U-3.

And as of January, 24.4% of unemployed Americans had been out of work longer than six months.

Both measures have come down since the immediate aftermath of the 2007-09 recession.

Ben Leubsdorf

Facebook

Twitter

U.S. Stock Futures Extend Gains

Futures on the S&P 500 are extending gains after January's jobs report showed a disappointing wage growth even though the headline reading on job creation topped expectations.

S&P 500 futures now up 0.4% to 2285 compared with 2279 before the report.

Chris Dieterich

Facebook

Twitter

Benchmark Revision Subtracts from March 2016 Payrolls

Today's jobs report from the Labor Department also contains the annual benchmark revision for data on U.S. nonfarm payrolls.

The update incorporates more accurate figures from the Quarterly Census of Employment and Wages, as well as seasonal-adjustment revisions going back several years.

As a result, the total level of nonfarm employment in March 2016 was revised down by 60,000. That's a smaller change than the average benchmark revision over the past decade.

Back in September, the Labor Department had preliminarily estimated the benchmark revision to the March 2016 employment level at down 150,000.

"The effect of these revisions on the underlying trend in nonfarm payroll employment was minor," the agency said.

Ben Leubsdorf

Facebook

Twitter

Dollar Dips After Jobs Report

The U.S. dollar also swung lower after the disappointing wage numbers.

The WSJ Dollar Index, which measures the currency against a basket of 16 peers, was recently down 0.02%, after being slightly higher on the day before the release.

Among major currencies, performance was mixed. The U.S. dollar was recently down 0.1% against the Japanese yen, while the euro dropped 0.1% against the greenback..